Grount rent forgiven

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    Grount rent forgiven

    Hi all - new user, so please bear with me.

    I have recent purchased a flat for my in-laws. It is a Victorian conversion and both freehold and leasehold were purchased from the developer, who had already sold the leasehold on the upper floor flat.

    The leasehold has been purchased by my wife. The freeehold has been purchased by a flat management company I have set up to hold the freehold, in order that if the upstairs flat wishes to purchase half of it (which they can't currently afford to do) the transfer will be easier (and also because bank would not offer mortgage on a flat with a share of freehold).

    This leaves me with the problem of my wife paying ground rent to a company owned by me and the company getting taxed on this "income". It's a small amount, but if I can avoid the tax I will, as there is no real income being earned here.

    Question is therefore, can the flat management company forgive the ground rent from the leasehold we own, and if so are there any tax implications of this forgiveness?

    An alternative question may be is it worth transferring the lease to my in-laws name and doing away with the flat management company altogether? What would the implications of a freehold being owned by an individual be?

    Thanks in advance for your help!

    Wrong forum. Repost on TAX.
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
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      Interesting question. I don't collect ground rent on my leaseholds as I own both the freehold and the leaseholds so I would just be moving money from one pocket to another. Yours is different yet somewhat similar as your company seems to be a personal holding company and, therefore, the money theoretically is moving from spouse to spouse. Therefore, why collect the ground rent. Just thinking out loud.


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